Keystone XL approval may be on the horizon, former Clinton official says

Federal approval of the Keystone XL Pipeline — the long-delayed underground route from Canada to bring heavy oil sands from Alberta to Gulf Coast refineries — could be imminent.

John Northington, a former U.S. Department of the Interior and Department of Energy official in the Clinton administration, said Tuesday in a conference call with the Houston-based Consumer Energy Alliance that prospects for the energy industry are only going up in the future. Part of that growth pattern will likely be designed by the controversial pipeline proposed by TransCanada Corp.

“I think the Keystone will be approved in fairly short order by the administration,” Northington said.

Michael Barnes, TransCanada's spokesman in Houston, said the company is increasingly optimistic about obtaining the necessary permitting. TransCanada has worked closely with Nebraska officials to develop a route that avoids the environmentally sensitive Sandhills area, which has been a key holdup in the process. A public hearing is scheduled in December, and then the route goes to the Nebraska Gov. Dave Heineman for his review. Barnes said TransCanada could have an answer by the end of the second quarter of 2013.

Northington spoke with former George W. Bush administration official Michael Whatley to address how the energy industry could help the U.S. avoid a fiscal cliff later this year.

Getting a compromise tax reform package through both chambers of Congress and to the president is less likely to impact the energy industry than potential regulations, he said. Regulations governing where producers can drill is more likely to be implemented, he said.

Whatley said that to rescind tax credits on “intangible drilling costs” could have a heavy impact, especially on independent oil and gas producers. Those credits may account for 25 percent of a company’s entire operating budget, he said.

“That impacts how many wells those companies can turn around and drill, and hiring and operations,” he said, adding that studies show overall revenue to the government could decline as the industry would have weaker revenue, decreasing the amount of money from energy in government coffers.